7 ideas on how to cover self employed illness and inability to work

With all the recent furore over the “White Van Man” NI contributions rising then scrapped in the Spring Budget, we thought we’d have a look at what happens when a self employed business owner falls ill and can’t work.

A quick Google search revealed first of all that the outlook is pretty bleak if you are unable to earn. For example no paternity pay for new Dads, so it’s no time off for that. Fall ill? No Statutory Sick Pay for you. You might be able to claim Employment and Support Allowance but the calculations for this look as though you will have to spend most of your savings first. This HMRC recommended calculator will start to show the hoops you may have to go through

So there is little or no financial help for you despite that fact that you might have worked for years, made decent profits and paid the resulting taxes – all with no complaint!

How to prepare in case of illness or disability

1) Take out some Key Person Insurance. There are plenty to choose from

2) Invest in Private Health Insurance

3) Have rainy day fund tucked away – speak to your accountant to make sure you do this in the most tax efficient way

4) Make friends with your competitors, find one you like and trust and ask them to act as your backup in an emergency. Could work both ways

5) If you have any employees, make sure there is a plan in place to cover you and that someone competent is clear about how to move forward

6) Keep an up to date list of passwords and important documentation in a secure place and the location shared with key people

7) Keep well and fit to reduce risk of illness

With little or no support compared to that available to the ‘employed’, you do need to take time and plan for the future (and pray it doesn’t happen!)